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8-K - FORM 8-K - UNITED SURGICAL PARTNERS INTERNATIONAL INC | d80020e8vk.htm |
Exhibit 99.1
Contact: | Mark A. Kopser Executive Vice President and Chief Financial Officer (972) 713-3500 |
UNITED SURGICAL PARTNERS INTERNATIONAL
ANNOUNCES FOURTH QUARTER AND YEAR-END 2010 RESULTS
ANNOUNCES FOURTH QUARTER AND YEAR-END 2010 RESULTS
Dallas, Texas (February 28, 2011) United Surgical Partners International, Inc. (USPI or the
Company) today announced results for the fourth quarter and year ended December 31, 2010.
Fourth Quarter Financial Results
For the quarter ended December 31, 2010, consolidated net revenues increased 3.5% to $154.2
million compared with $149.0 million in the prior year period. Operating income for the fourth
quarter was $53.0 million as compared with $50.9 million for the prior year period. Operating
income margin for the fourth quarter of 2010 was 34.3% versus 34.2% in the prior year period. For
the quarter, adjusted EBITDA less noncontrolling interests was $55.4 million compared with $51.8
million in the prior year period.
The financial results for the fourth quarter were driven by systemwide revenue growth of 13%,
consisting of 8% U.S. same-facility revenue growth and the remainder being due to acquisition
activity.
Cash flows from operating activities for the fourth quarter totaled $31.3 million compared
with $38.6 million for the prior year period. During the fourth quarter, the Company and its
consolidated subsidiaries invested approximately $3.7 million in maintenance capital expenditures
and an additional $8.4 million to develop new facilities and expand existing facilities.
Full Year Financial Results
For the year ended December 31, 2010, consolidated net revenues were $576.7 million compared
with $593.5 million in the prior year. On a year-over-year basis, consolidated net revenues were
reduced by $14.6 million due to the deconsolidation of facilities that are now accounted for under
the equity method. Operating income for 2010 was $210.5 million as compared with $198.3 million
for 2009. Operating income margin for the year ended December 31, 2010, increased 310 basis points
to 36.5% from 33.4% in the prior year. For the year, adjusted EBITDA less controlling interests
was $200.2 million as compared with $194.0 million in the prior year period.
The financial results for the year were driven by systemwide revenue growth of 7%, consisting
of 5% U.S. same-facility revenue growth and the remainder being due to acquisition activity.
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United Surgical Partners Announces Fourth Quarter and Year-End 2010 Results
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Cash flows from operating activities for the year ended December 31, 2010, totaled $169.1
million compared with $180.6 million for the prior year. This decrease was primarily due to
non-recurring expenses and an increase in cash tax payments. During 2010, the Company and its
consolidated subsidiaries invested approximately $18.7 million in maintenance capital expenditures
and an additional $21.3 million to develop new facilities and expand existing facilities.
Systemwide Financial Results
Due to the Companys partnerships with physicians and not-for-profit healthcare systems, the
Company does not consolidate the financial results of the majority of its facilities. While
revenues of the Companys unconsolidated facilities are not recorded as revenues by USPI, equity in
earnings of unconsolidated affiliates is a significant and growing portion of the Companys overall
earnings. To help analyze results of operations, management uses systemwide operating measures
such as systemwide revenue growth, which includes revenues of both consolidated and unconsolidated
facilities. In addition to overall systemwide revenue growth, USPI calculates growth rates and
operating margins for the facilities that were operational in both the current and prior year
periods, a group the Company refers to as same-store or same-facility. This group also consists of
both consolidated and unconsolidated facilities. At December 31, 2010, 130 of the 189 facilities
the Company operated were not consolidated.
Revenue Analysis
For the full year, the systemwide revenues of the facilities operated by the Company increased
7%, while consolidated revenues decreased. Consolidated and unconsolidated revenues were also
affected by certain transactions and a stronger U.S. dollar. The table below lists the key drivers
of year-over-year changes in revenues.
Three Months Ended | Year Ended | |||||||||||||||
December 31, 2010 | December 31, 2010 | |||||||||||||||
As Reported | Unconsolidated | As Reported | Unconsolidated | |||||||||||||
Under GAAP | Affiliates | Under GAAP | Affiliates | |||||||||||||
Total revenues, period ended
December 31, 2009 |
$ | 148,967 | $ | 322,812 | $ | 593,475 | $ | 1,178,114 | ||||||||
Add: Revenue from acquired facilities |
2,231 | 21,556 | 8,070 | 45,909 | ||||||||||||
Less: Revenue of disposed facilities |
| (2,324 | ) | | (12,169 | ) | ||||||||||
Less: Revenue of deconsolidated
facilities |
(1,536 | ) | 1,536 | (14,571 | ) | 14,571 | ||||||||||
Impact of exchange rate |
(895 | ) | | (1,199 | ) | | ||||||||||
Adjusted base period |
148,767 | 343,580 | 585,775 | 1,226,425 | ||||||||||||
(Decrease) increase from operations |
4,179 | 33,992 | (9,366 | ) | 97,093 | |||||||||||
Non-facility based revenue |
1,266 | 49 | 256 | 5,523 | ||||||||||||
Total revenues, period ended
December 31, 2010 |
$ | 154,212 | $ | 377,621 | $ | 576,665 | $ | 1,329,041 | ||||||||
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United Surgical Partners Announces Fourth Quarter and Year-End 2010 Results
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Development Activity
During the year, the Company added 27 facilities and completed the sale of its interest in
three facilities. In addition, the Company sold its subsidiary, American Endoscopy Services, in
December. At December 31, 2010, the Company had six facilities under development, of which five
were under construction. In addition to the three divestitures, the Company deconsolidated the
financial results of two facilities that it continues to operate.
Other Items
In the prior year ended December 31, 2009, the Companys tax provision included the
recognition of a $31.2 million U.S. income tax benefit. This benefit, which encompasses the
Companys net operating loss carryforwards and most other U.S. deferred tax assets, was recognized
because the Company considers it more likely than not that taxable income will be generated in the
future to allow those assets to be realized.
In order to analyze operating results, various expenses have been identified below in order to
assist in understanding the Companys operating and full year results. These items are discussed
further in the Companys 2010 Form 10-K.
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Operating income as reported |
$ | 52,970 | $ | 50,882 | $ | 210,516 | $ | 198,295 | ||||||||
Losses on deconsolidations, disposals
and impairments |
5,842 | 9,630 | 6,378 | 29,162 | ||||||||||||
Impairment of unconsolidated affiliate |
3,676 | | 3,676 | | ||||||||||||
Expense related to previous
acquisition and facility purchase
option |
| | 6,000 | | ||||||||||||
Acquisition costs |
2,713 | 98 | 3,385 | 98 | ||||||||||||
VAT assessment |
| | 965 | (965 | ) | |||||||||||
Depreciation and amortization |
7,671 | 7,714 | 29,799 | 31,165 | ||||||||||||
Adjusted EBITDA |
72,872 | 68,324 | 260,719 | 257,755 | ||||||||||||
Noncontrolling interests |
(17,481 | ) | (16,515 | ) | (60,560 | ) | (63,722 | ) | ||||||||
Adjusted EBITDA less noncontrolling
interests |
$ | 55,391 | $ | 51,809 | $ | 200,159 | $ | 194,033 | ||||||||
Summary
Commenting on the results, William H. Wilcox, USPIs chief executive officer, said, We are
pleased with our fourth quarter volume growth and acquisition activity, and we believe it is
representative of favorable momentum going into 2011.
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United Surgical Partners Announces Fourth Quarter and Year-End 2010 Results
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February 28, 2011
The live broadcast of USPIs fourth quarter and year-end conference call will begin at 10:00
a.m. Eastern Time on February 28, 2011. A 30-day online replay will be available approximately an
hour following the conclusion of the live broadcast. A link to these events can be found on the
Companys website at www.unitedsurgical.com or at
www.earnings.com. Additional financial
information pertaining to United Surgical Partners International may be found by visiting the
Investor Relations section of the Companys website.
USPI, headquartered in Dallas, Texas, currently has ownership interests in or operates 190
surgical facilities. Of the Companys 185 domestic facilities, 133 are jointly owned with
not-for-profit healthcare systems. The Company also operates five facilities in the United
Kingdom.
The above includes forward-looking statements based on current management expectations.
Numerous factors exist that may cause results to differ from these expectations. Many of the
factors that will determine the Companys future results are beyond the ability of the Company to
control or predict. These statements are subject to risks and uncertainties relating to the
Company, including without limitation, (i) reduction in reimbursement from payors; (ii) the
Companys ability to attract physicians and retain qualified management and personnel; (iii) the
Companys significant leverage; (iv) geographic concentrations of certain of the Companys
operations; (v) risks associated with the Companys acquisition and development strategies; (vi)
the regulated nature of the healthcare industry; (vii) the highly competitive nature of the
healthcare business; and (viii) those risks and uncertainties described from time to time in the
Companys filings with the Securities and Exchange Commission. Therefore, the Companys actual
results may differ materially. The Company undertakes no obligation to update any forward-looking
statements or to make any other forward-looking statements, whether as a result of new information,
future events or otherwise.
Adjusted EBITDA and Adjusted EBITDA less noncontrolling interests are not measures defined
under generally accepted accounting principles (GAAP). The Company believes Adjusted EBITDA and
Adjusted EBITDA less noncontrolling interests are important measures for purposes of allocating
resources and assessing performance. Adjusted EBITDA, which is computed by adding operating income
plus depreciation and amortization and non-routine charges affecting comparability is commonly used
as an analytical indicator within the healthcare industry and also serves as a measure of leverage
capacity and debt service ability. Adjusted EBITDA less noncontrolling interests, which is computed
by subtracting net income attributable to noncontrolling interests from Adjusted EBITDA, adjusts
both years Adjusted EBITDA to reflect that the Company does not own 100% of each facility.
Adjusted EBITDA and Adjusted EBITDA less noncontrolling interests should not be considered as
measures of financial performance under GAAP, and the items excluded from Adjusted EBITDA and
Adjusted EBITDA less noncontrolling interests are significant components in understanding and
assessing financial performance. Because Adjusted EBITDA and Adjusted EBITDA less noncontrolling
interests are not measurements determined in accordance with GAAP and are thus susceptible to
varying calculation methods, Adjusted EBITDA and Adjusted EBITDA less noncontrolling interests as
presented by United Surgical Partners International may not be comparable to similarly titled
measures of other companies.
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United Surgical Partners Announces Fourth Quarter and Year-End 2010 Results
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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Unaudited Condensed Consolidated Statements of Income
(in thousands, except number of facilities)
Unaudited Condensed Consolidated Statements of Income
(in thousands, except number of facilities)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues |
$ | 154,212 | $ | 148,967 | $ | 576,665 | $ | 593,475 | ||||||||
Equity in earnings of unconsolidated
affiliates |
20,162 | 18,661 | 69,916 | 61,771 | ||||||||||||
Operating expenses: |
||||||||||||||||
Salaries, benefits and other
employee costs |
42,506 | 40,322 | 156,213 | 160,278 | ||||||||||||
Medical services and supplies |
26,063 | 25,604 | 97,940 | 99,510 | ||||||||||||
Other operating expenses |
26,227 | 23,126 | 99,075 | 89,347 | ||||||||||||
General and administrative expenses |
10,908 | 9,060 | 38,202 | 38,769 | ||||||||||||
Provision for doubtful accounts |
2,187 | 1,290 | 8,458 | 8,720 | ||||||||||||
Losses on deconsolidations, disposals
and impairments |
5,842 | 9,630 | 6,378 | 29,162 | ||||||||||||
Depreciation and amortization |
7,671 | 7,714 | 29,799 | 31,165 | ||||||||||||
Total operating expenses |
121,404 | 116,746 | 436,065 | 456,951 | ||||||||||||
Operating income |
52,970 | 50,882 | 210,516 | 198,295 | ||||||||||||
Interest expense, net |
(17,224 | ) | (16,982 | ) | (69,240 | ) | (67,612 | ) | ||||||||
Other, net |
(14 | ) | 113 | 708 | 373 | |||||||||||
Income from continuing operations
before income taxes |
35,732 | 34,013 | 141,984 | 131,056 | ||||||||||||
Income tax (expense) benefit |
(8,091 | ) | (9,256 | ) | (32,328 | ) | 879 | |||||||||
Income from continuing operations |
27,641 | 24,757 | 109,656 | 131,935 | ||||||||||||
Discontinued operations, net of tax |
(7,813 | ) | 281 | (7,003 | ) | 1,453 | ||||||||||
Net income |
19,828 | 25,038 | 102,653 | 133,388 | ||||||||||||
Less: Net income attributable to
noncontrolling interests |
(17,481 | ) | (16,515 | ) | (60,560 | ) | (63,722 | ) | ||||||||
Net income attributable to USPIs
common stockholder |
$ | 2,347 | $ | 8,523 | $ | 42,093 | $ | 69,666 | ||||||||
Supplemental Data: |
||||||||||||||||
Facilities operated at period end |
189 | 169 | 189 | 169 |
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United Surgical Partners Announces Fourth Quarter and Year-End 2010 Results
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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
Dec. 31, | Dec. 31, | |||||||
2010 | 2009 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 60,253 | $ | 34,890 | ||||
Accounts receivable, net of allowance for doubtful
accounts of $7,481 and $8,160, respectively |
50,082 | 54,237 | ||||||
Other receivables |
15,242 | 15,246 | ||||||
Inventories |
9,191 | 8,789 | ||||||
Deferred tax assets, net |
14,961 | 16,400 | ||||||
Other |
14,682 | 14,382 | ||||||
Total current assets |
164,411 | 143,944 | ||||||
Property and equipment, net |
202,260 | 198,506 | ||||||
Investments in unconsolidated affiliates |
393,561 | 355,499 | ||||||
Goodwill and intangible assets, net |
1,587,876 | 1,602,187 | ||||||
Other |
24,631 | 25,256 | ||||||
Total assets |
$ | 2,372,739 | $ | 2,325,392 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 23,488 | $ | 23,475 | ||||
Accrued expenses and other |
218,786 | 210,148 | ||||||
Current portion of long-term debt |
22,386 | 23,337 | ||||||
Total current liabilities |
264,660 | 256,960 | ||||||
Long-term debt |
1,047,440 | 1,048,191 | ||||||
Other liabilities |
157,820 | 158,373 | ||||||
Total liabilities |
1,469,920 | 1,463,524 | ||||||
Noncontrolling interests redeemable |
81,668 | 63,865 | ||||||
USPI stockholders equity |
786,757 | 757,952 | ||||||
Noncontrolling interests nonredeemable |
34,394 | 40,051 | ||||||
Total equity |
821,151 | 798,003 | ||||||
Total liabilities and equity |
$ | 2,372,739 | $ | 2,325,392 | ||||
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United Surgical Partners Announces Fourth Quarter and Year-End 2010 Results
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UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
Key Operating Statistics
Key Operating Statistics
Three Months Ended December 31, | ||||||||||||
2010 | 2009 | % Change | ||||||||||
Systemwide statistics (in thousands): |
||||||||||||
Revenue |
$ | 516,826 | $ | 459,557 | 12.5 | % | ||||||
Systemwide same-facility statistics(1) (2): |
||||||||||||
United States: |
||||||||||||
Facility cases |
212,023 | 206,770 | 2.5 | % | ||||||||
Net revenue/case |
$ | 2,282 | $ | 2,160 | 5.6 | % | ||||||
Net revenue (in thousands) |
$ | 483,792 | $ | 446,624 | 8.3 | % | ||||||
Facility operating income margin(3) |
29.5 | % | 28.9 | % | 60 bps | |||||||
United Kingdom: |
||||||||||||
Adjusted admissions |
5,272 | 5,394 | (2.3 | %) | ||||||||
Net revenue/adjusted admission |
$ | 5,010 | $ | 5,026 | (0.3 | %) | ||||||
Net revenue/adjusted admission
(at constant currency translation rates)(4) |
$ | 5,010 | $ | 4,793 | 4.5 | % | ||||||
Net revenue (in thousands) |
$ | 26,413 | $ | 27,109 | (2.6 | %) | ||||||
Facility operating income margin(3) |
21.4 | % | 22.6 | % | (120) bps | |||||||
Other: |
||||||||||||
Total consolidated facilities |
58 | 60 |
(1) | Excludes facilities in their first year of operations. Includes facilities accounted for under the equity method as well as consolidated facilities. | |
(2) | Statistics are included in both periods for current year acquisitions. | |
(3) | Calculated as operating income divided by net revenue. | |
(4) | Calculated using fourth quarter 2010 exchange rates. The Company believes net revenue per adjusted admission is an important measure of the United Kingdom operations and that using a constant currency translation rate more accurately reflects the trend of the business. |
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